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Network externalities and the Coase conjecture

Mason, Robin (2000) Network externalities and the Coase conjecture European Economic Review, 44, (10), pp. 1981-1992. (doi:10.1016/S0014-2921(99)00067-7).

Record type: Article


This paper addresses two general questions. First, what is the effect of market structure on the development of a network in a dynamic model with rational expectations? Secondly, is the intuition that network externalities are ‘economies of scale on the demand side’ correct? These questions are examined in a model of durable good production in the presence of network externalities. Two results are presented. First, the Coase conjecture fails in its strongest sense when network benefits are increasing in the current network size. Secondly, a committed monopolist may be socially preferable to a time consistent producer when network externalities are sufficiently large. The analysis indicates an analogy between network externalities and learning-by-doing

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Published date: 2000
Additional Information: JEL classification codes: C73, C78, D42, L12
Keywords: coase conjecture, network externalities


Local EPrints ID: 33003
ISSN: 0014-2921
PURE UUID: 50bc36f7-4591-4775-bae8-5025480a151d

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Date deposited: 18 Jul 2006
Last modified: 17 Jul 2017 15:54

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Author: Robin Mason

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